New York health officials have changed the way they're delivering prescription drugs to people in the state's Medicaid program.

It's expected to save hundreds of millions of dollars — both for state and federal taxpayers while also addressing what officials have criticized as an opaque system. But at the same time, providers say problems are already emerging. 

Starting this month, the state Department of Health moved to eliminate what amounts to a middleman in prescription drug distribution under the Medicaid program. New York State Medicaid Director Amir Bassiri says the rollout won't have a broad-based effect on patients who rely on the program for access to drugs meant to treat illnesses like HIV/AIDS and hepatitis C. 

"Our goal is that there is no impact to members," Bassiri said. "This is somewhat invisible to them. All of these changes that we are making are behind the scenes and they should not be causing any interruption or disruption in members receiving their medications."

The change has been in the works since 2019, meant to prevent third party middlemen from essentially pocketing money from Medicaid prescription drugs sold to health providers. The move is expected to save $410 million this fiscal year alone in state money — and $547 million next year. 

"We believe the providers will benefit and we think it's a far more efficient use of Medicaid resources to support providers that are delivering services to our members as opposed to intermediaries who don't have the financial interest of the Medicaid program," Bassiri said. 

Health officials plan to take the money saved and send it directly to health providers around the state. State health officials say millions of additional dollars will go to health care providers around the state, including $30 million for those that provide services for HIV/AIDS patients. 

The state is also sending $250 million in state and federal Medicaid money to Federally Qualified Health Centers and $425 million in state and federal funding into hospitals.

"There shouldn't be any disruption to services," Bassiri said. "We know members are going to access to those medications. This is a better and more transparent system that's going to be patient centric."

But providers are skeptical and have been pushing back in the lead-up to the change taking effect. That includes Mike Lee of Evergreen Health in Western New York. 

"The idea that there won't be a disruption to patient care is absurd at this point," he said. 

Lee is worried the change will result in lower reimbursement rates for providers, hurting their ability to provide services like transportation and food. Seventy percent of Evergreen patients are on a Medicaid managed care plan. 

Providers want the prescription drug change shelved as part of the ongoing state budget talks with lawmakers and Gov. Kathy Hochul negotiate the state budget. 

"We can't operate the services that we have, the HIV dental services, the trans youth coordinators, the housing and transportation — all of these things are about to take a significant nosedive because we don't have funding for them anymore," he said.